I recently appeared on BNN’s Market Call, you can watch the video here if you missed it: Market Call

The following day my full background on the three Top Picks and Market Outlook were printed here: Top Picks

Clearly BNN is a great opportunity for us to showcase our investment knowledge to a broader audience and give the public a better idea of who we are. Unfortunately, however, the stock specific nature of the program is sometimes hard to deal with as a portfolio manager. All stocks have positive and negative characteristics which in a vacuum can be analysed with the hope of drawing a specific conclusion about that stocks potential return over a period of time. The problem is that stocks do not perform, nor can they be evaluated, in a vacuum. Stocks perform in the context of their peers, sectors and markets, while their potential risks and returns need to be evaluated in the context of the overall portfolio. This is why it is difficult to dispense targeted advice to a caller on a specific stock without knowing what else they own, let alone their life circumstances.

We view a portfolio as a return compounding machine that works, on balance, year in and year out. Every stock in the portfolio is part of the plan and company specific factors can cause deviations in performance over the short term (both positive and negative). It is important to look at the compounding power of the whole portfolio over a period of 5 years or more rather than looking at individual stock performances during any one quarter or year which can take investors off course.

All that said I always enjoy the show and talking about companies. It’s fun to listen to the callers and try to help shed some light on what is going on with specific companies within their portfolio. I am very careful not to bash a specific company just because we don’t own it because that’s not fair analysis. We can only own 25-30 stocks and there are lots of good companies that are not in portfolios we construct for one reason or another.

As always our goal is to stress that investing is about the long term and that dividends help the investor to compound significant amount of return whether the stock is up, down or sideways in the short term.

Ryan Bushell

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